Standard Life Aberdeen sells insurance arm to Phoenix in £3.2bn deal

Standard Life Aberdeen has sold its insurance arm to Phoenix Group in a £3.2 billion deal.

Following the sale Standard Life Aberdeen will keep its three platforms (Standard Life Wrap, Elevate and Parmenion) and advice arm 1825, which currently sit within the insurance division.

‘The sale involves the disposal of Standard Life Assurance Limited, with Standard Life Aberdeen retaining its UK retail platforms and financial advice business. The businesses transferring to Phoenix group as part of the sale include the UK mature retail and spread/risk books and the Europe, UK retail and workplace businesses,’ the company said in a statement this morning.

Under the terms of the deal Standard Life Aberdeen will receive around £3.2 billion. Phoenix will pay £2 billion in cash, with a further £312 million dividend payment due from the insurance company before it is sold. The remaining value of the deal consists of Standard Life Aberdeen taking a 20% stake in Phoenix.

As part of the announcement the pair said they would continue their arrangement whereby Standard Life Aberdeen will continue to be the asset manager for the insurance business acquired by Phoenix as well as the assets it already manages for Phoenix – in total these assets now amount of £158 billion.

'In addition, subject to normal commercial and governance constraints, Phoenix Group has committed to review further investment management mandates not currently managed by Aberdeen Standard Investments, who will be its preferred asset management partner for insurance investment solutions, as well as future consolidation opportunities,’ a company statement said.

Following the deal Phoenix said half of the newly enlarged group will be based in Edinburgh where it will be moving its headquarters to.

The company said the reason for the sale was its desire to focus on its retail platforms and asset manager arm Aberdeen Standard Investments.

‘In partnering with Phoenix Group, whose expertise is in administering and servicing long-term savings, Standard Life Aberdeen is able to realise attractive value for the disposed businesses, while continuing to benefit from access to related assets and flows,’ the company said.

'This transaction completes our transformation to a capital light investment business, a process started in 2010 with the sale of Standard Life Bank, continuing with the sale of our Canadian business and the merger last year between Standard Life and Aberdeen Asset Management,' Standard Life Aberdeen chair Gerry Grimstone said.

News of the sale follows last week decision by Lloyds Banking Group to pull the Scottish Widows Investment Partnership (Swip) £109 billion funds from Standard Life Aberdeen.

Lloyds, which owns Scottish Widows, has now begun a contest for these £109 billion funds and is chief executive said earlier this week it is getting a ‘lot of interest’ in it.

Scottish Widows chief executive Antonio Lorenzo said Standard Life Aberdeen could participate in this contest if it fixed its competitor issue which is the presence of the Standard Life insurance arm.

‘Many people want to participate [in the contest]. We welcome Standard Life Aberdeen to participate if they fix their problem with competition. We are not thinking to address this internally,’ he said.

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